Molefe had 'unbundled' confinement tenders

Brian Molefe at the Eskom Inquiry in 2017. Volmink said that Molefe had approved four different transactions to McKinsey in a matter of days so they could fall separately into his delegated authority. File Photo: Henk Kruger/African News Agency (ANA)

JOHANNESBURG – Transnet's executive manager for governance, Peter Volmink, on Friday lifted the veil on the impunity with which former group executive Brian Molefe and chief financial officer Anoj Singh handled tenders at the company, going as far as keeping tenders secret up until they were awarded.

Volmink said Molefe had “unbundled” confinement tenders to McKinsey Consulting so that they could fall within his delegated authority and escape scrutiny from higher authorities at the entity.

Volmink said that Molefe had approved four different transactions to McKinsey in a matter of days so they could fall separately into his delegated authority.

“Our code of ethics states that it is considered an ethical breach to unbundle a transaction into smaller components in order to avoid higher level of authority and scrutiny,” Volmink said.

“Over a period of four days, former group chief executive Brian Molefe approved four confinements (to McKinsey) with a combined value of R690 million. Molefe had a delegation to approve confinements, but only up to R250m. Each of the four confinements fell under R250m; the first one was R130m, the second one was R239m, the third one R150m and the fourth one R100m. So when viewed on their own, they would have fallen through his delegated authority, but viewed cumulatively it should been referred to the board acquisition and disposal committee.” The confinement to McKinsey effectively made it the sole bidder to some contracts with the rail and logistics group.

Volmink said that through a confinement tender process, McKinsey bagged eight contracts over a two-year period under Molefe as chief executive, which were worth R2.1billion, with some amendments made to the scope of the tender to ensure continuity.

It is not the first time McKinsey has found itself at the centre of state capture allegations. McKinsey lost most of its clients in South Africa in 2017 after it emerged last year that it had partnered with local consultancy Trillian, a Gupta-linked firm, in order to win a R1.6bn contract with state power utility Eskom in 2016. McKinsey has since paid back just more than R902m plus interest to Eskom. The consulting company could not be reached for comment on Volmink’s testimony.

Volmink dropped a further bombshell when he testified that a number of confinement contracts were classified as confidential.